Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent.
Segmented income statements for a typical month appear as follows (all amounts in millions of dollars):
Routes | Within U.S. | Within Europe | Between U.S. and Europe |
||||||||
Sales | $ | 3.37 | $ | 2.74 | $ | 2.79 | |||||
Variable costs | 1.34 | 0.95 | 1.75 | ||||||||
Fixed costs allocated to routes | 1.69 | 1.27 | 1.37 | ||||||||
Operating profit (loss) | $ | 0.34 | $ | 0.52 | $ | (0.33 | ) | ||||
Required:
a. Prepare a differential cost schedule. (Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect. Enter your answers in millions rounded to 2 decimal places.)
b,
Should Freeflight drop the routes between Europe and the United States? Y or N
Answer with working notes is given below
Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering...
Freeflight Airlines is presently operating at 70 percent of capacity, Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent Segmented income statements for a typical month appear as follows (all amounts in millions of dollars): Routes Sales Variable costs Fixed costs...
Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent. Segmented income statements for a typical month appear as follows (all amounts in millions of dollars): Within Within Routes Between U.S. U.S....
Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent. Segmented income statements for a typical month appear as follows (all amounts in millions of dollars): Routes Sales Variable costs Fixed costs...
Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent. Segmented Income statements for a typical month appear as follows (all amounts In millions of dollars): within Routes U.S. Sales $3.23 Variable...
Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent. Segmented income statements for a typical month appear as follows (all amounts in millions of dollars): Routes Within U.S. Within Europe Between...
Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent. Segmented income statements for a typical month appear as follows (all amounts in millions of dollars): Routes Within U.S. Within Europe Between...
Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe end the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent. Segmented income statements for a typical month appear as follows (all amounts in millions of dollars): Within Within Europe $ 2.73 Between...
Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent. Segmented income statements for a typical month appear as follows (all amounts in millions of dollars): Routes Within U.S. Within Europe Between...
Freefight Airlines is presently operating at 70 percent of capacity Management of the alline is considering dropping Freetlight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total foxed costs would be reduced by 20 percent. Segmented income statements for a typical manth appear as follows all amounts in milions of dollars Routes W US $ 3.30 1.22...